Wednesday, July 18, 2012

The U.S can never involuntarily go bankrupt!!!......

Pretty obvious that all government spending goes into our hands and that the deficits and national Debts are accounting measures and don't mean that we threw the money down a rat hole. Some of it is in my retirement government bonds. More is going to old farts, retirees and welfare bums. Much goes back to government employees and contractors.

Every penny gets spent and taxed back to the Treasury. Government spends a dolar it gets it back one way or the other in a fiat money economy. Banks create most of the money by making loans so if you want more money going into the Treasury.....

Send us a big check and we will pay off our bills and buy every fucking thing in sight!!!

I guess it's more fun and politically useful for the people who own us to scare the beJesus out of little old ladies on SS and Repubilcans and keep this nuttiness going.

Yes, the government must be stopped in it's tracks because we can't fart without it's blessing, permission or order.

but slashing government spending ain't going to work! We all have a government check , job, or position to protect because the Republicans lied about making the government smaller and few, if any voters, were serious about it.


It's over for small government believers because they can't get their own politicians to go along because the voters are so dependant they can't survive without that tit.

P.s every one of the "leaders" of both parties know it.

So, what do we do? Get used to it. 

The Things Obama Says…. | PRAGMATIC CAPITALISM

If you just finished section 6 in Understanding the Modern Monetary System then you understand a lot more about the monetary system than Barack Obama.  Because once you understand sector balance economics you understand that the three sectors (public, private and foreign) must always add up to zero.  So, since we have a foreign sector that equates to a 4% demand leakage, and a public sector that is running a 8% deficit that leaves the private with a 4% surplus.  Not bad.  But it’s also obviously not great since the private sector remains burdened by excessive debt and is trying to crawl out of this debt hole. More frightening is the idea that getting back to a budget surplus is somehow a good thing.  As if the government needs to “tighten its belt strap” just like a household does because it might go bankrupt.  Of course, the government doesn’t have a solvency constraint so the entire analogy is void of value.  So when the public sector gets back to that surplus range we end up having a 4% demand leakage from the foreign sector and a 4% deficit for the private sector (see the image below).  This is precisely what led up to the crisis and helped contribute to the current economic malaise.  It is not what we need right now!  In a deleveraging cycle within a nation running a trade deficit the private sector needs helps deleveraging.  And since the public sector has no solvency constraint it is the only sector that can provide the deficit that is necessary to ease this burden.  Otherwise, we risk repeating the mistakes of the late 90′s that caused this whole mess to begin with!

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